The Impact of Health Care Reform on Employers

[eridani]

Towers Watson
May 25, 2010
The Impact of Health Care Reform on Employers

Although U.S. employers view controlling health care costs as their highest health care reform priority, few believe that the recently enacted Patient Protection and Affordable Care Act (PPACA) will stem the tide of rising costs, according to a May 2010 survey by Towers Watson.

In order to cope with anticipated cost increases, many employers plan on:

* Passing on increases to employees (88%)
* Reducing health benefits and programs (74% )
* Absorbing costs in the business (33%)
* Passing on increases to customers (20%)

More than three in four employers (85%) believe that health care reform will reduce the number of large organizations offering employer-sponsored retiree medical benefits. And 43% of employers that currently offer retiree medical plans plan to reduce or eliminate them.

Fifty-eight percent of employers surveyed believe health care reform will drive large employers to adopt total replacement consumer-driven health plans (CDHP) for their active employees.

Press release:
http://www.towerswatson.com/press/1936

Key findings:
http://www.towerswatson.com/research/1935

Report (8 pages):
http://www.towerswatson.com/assets/pdf/1935/Post-HCR_Flash_survey_bulletin_5_25_10(1).pdf


Comment: Although we have seen many employer surveys in the past, this one is especially important because it represents the views of employers' human resources professionals who face the reality that the Patient Protection and Affordable Care Act (PPACA) is now law. Since PPACA was designed to perpetuate the role of employer-sponsored health plans, we need to look at the likely responses of employers.

Most employers (90 percent) believe that PPACA will increase their organization’s health care benefit costs. What is alarming is that employers do not intend to pass those cost increases on to their customers as they would with any other overhead increases, but instead they intend to pass them on to their employees in the form of increased premiums and cost sharing, and a reduction in benefits (which also results in higher out-of-pocket expenses for the employees).

More specifically, 58 percent of employers believe that large employers will adopt total replacement consumer-driven health plans (CDHP) for their active employees. "Total replacement" means that employees would be offered no option other then the high-deductible consumer-driven health plans. That could be disastrous for employees with modest incomes who develop significant health problems.

And future retirees can pretty much forget about receiving any retiree health benefits. Employers indicate that they are likely to take advantage of the fact that retirees under age 65 will be able to purchase plans in the exchanges without being excluded because of preexisting conditions.

This is the insurance that President Obama, during his campaign, promised that you could keep if you wanted to. What he didn't tell you is that, in most instances, you will not be permitted to drop that plan and select another one in the state insurance exchanges. As long as the employer's plan has an actuarial value of 60 percent (you pay an average of 40 percent of the medical bills), you are prohibited from selecting a better plan in the exchanges.

Once again, we can still fix this. We can enact a single payer national health program - health care for everyone, without financial barriers.

[napi21]

1. So who is Tower Watson? I happen to believe most employers who offer

HC to their retirees are planning to or already have eliminated that. As far as what else will happen in the HC industry, it's anybody's guess. I think we all have to wait & see. I remember just as many if not more people were claiming medicare was going to bankrupt the country, drive seniors into bankruptcy, etc.

[SemiCharmedQuark]

3. It is a consulting firm.

[Lasher]

2. Shitty expensive health insurance we can't afford to use.

But hey, at least everybody will be covered. Almost.

[lonestarnot]

4. Another reason to redraft and revise to single payer.

[Scuba]

5. Agreed.

[Selatius]

7. In order to do that, you have to remove right wing Democrats in the Senate.

Otherwise, they will simply attack you within your own camp, and you would be too busy with them to deal with the Republicans. Worse yet, they'll deny you the votes necessary to ram through a Medicare for All bill.

[lib2DaBone]

6. Rather than deal with HCR.. Employers Offer No Insurance to New Hires...

I send out 30-50 resumes a week .

In my job search, I have found, that rather than deal with Health Care Reform, most emplyers are advertising any new hires as PRN (as Needed), Temporary hire (38 1/2 hours a week0 or as as sub-contractor status.

This could be a function of our "Jobless Recovery".. but it seems that HCR is hurting more than helping. (Especially with Medicare and doctors laying off office staff and cutting hours)

[inna]

8. K&R. Important thread, it's too bad it sank like a stone.

:kick:

[eridani]

10. Kicking for one more day n/t

[Cleita]

9. Yep, costs won't be controlled until the insurance companies are

forbidden to offer insurance for basic health care. Similar plans have proven costly where they have been implemented like in Massachusetts and some foreign countries, like the Netherlands. Single payer is the most comprehensive and least expensive to implement. But since the major insurance companies and oil companies are in charge of our government, I guess we will have to spend ourselves into bankruptcy first. Maybe then those corporations raiding our Treasury will get out when we hit rock bottom and there is nothing left to steal. Welcome to the third world America.

[eridani]

11. Hitting CA especially hard

http://www.latimes.com/business/la-fi-smallbiz-insurance-20100526,0,4004715.story


Small businesses in California are being hit this year with double-digit hikes in health insurance costs that could hurt the state's economic recovery as companies curtail plans for hiring and expansion to pay their insurance bills.

Five major insurers in California's small-business market are raising rates 12% to 23% for firms with fewer than 50 employees, according to a survey by The Times.

Similar increases are being felt by many small businesses across the nation, including those in Texas, Ohio and Florida — mainly the result of escalating costs for medical care and pharmaceuticals, insurers say.

In California, some small businesses say they are stunned by their latest insurance bills. Longtime customers of Blue Shield of California, for instance, are facing rate hikes as high as 76% after the insurer lost money on a handful of plans.

"We don't have that money," said Ann Terranova, a San Francisco financial planner who is dropping Blue Shield for herself and two employees after learning that their annual premium would jump to more than $19,000 a year from $11,000.